For reporting and tax purposes, the following documents are required by the federal and state governments. They ask that you obtain an EIN, withhold taxes, verify your worker’s eligibility before hiring and register them with the state after they begin working for you.
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Obtain an Employer Identification Number
Before hiring your first employee, you need to have registered your business with the US Internal Revenue Service (IRS) and received an Employment Identification Number (EIN). You can do this by filling out a Form SS-4. Return to the Business Registration page to learn more. The EIN is necessary for reporting taxes and other documents to the IRS, as well as reporting information about your employees to state agencies.
Set Up a Payroll System to Withhold Taxes
There are many reasons why you should keep good records. Keeping good records can help you monitor the progress of your business, prepare tax returns and financial statements, and identify sources of receipts. Also, the IRS requires that you keep records of employment taxes for at least four years. It is in your best interest to keep good records.
Federal Income Tax Withholding
Every employee must provide their employer with a signed W-4 withholding exemption form so that you can withhold the correct amount from their paychecks. Your employees will tell you how many allowances they are claiming for tax purposes through their W-4. If your employee wants to change their allowances for the next tax year, they will need to provide you with a new W-4 with the correct changes. For more specific information, read the IRS Employer’s Tax Guide or check out irs.gov.
Also, make sure your employees provide you with a signed CT-W4, which gives the state the information needed to withhold the correct amount of income for state taxes.
Verify Employee Eligibility
Federal law requires employers to verify an employee’s eligibility to work in the United States within three days of hire by completing Form I-9. Form I-9 confirms the employee’s citizenship or eligibility to work in the U.S. To complete this form, employers can only request the documentation specified on the I-9 form.
Employers must keep each employee's I-9 on file for three years after the date of hire or one year after the date of the employee’s termination, whichever is later.
Note: Employers can electronically verify the employment eligibility of newly hired employees by registering with E-Verify using the information provided by the Form I-9 filled out by your employee.
Report New Hires to Your State's Reporting Agency
All employers are required to report newly hired and re-hired employees to Connecticut’s New Hire Reporting System within 20 days of their hire or rehire date. Neither age nor occupation is a factor in reporting new hires, and students under the age of 18 as well as family members must be reported as a new hire.
Register Your Employees with the CT Unemployment Insurance Tax Division
All employers must register their employees with the Unemployment Insurance Tax Division using the UC-1A Employer Status Report form. The Unemployment Insurance Tax Division is responsible for the funding needed to pay CT employees that have become unemployed through no fault of their own. To learn more about unemployment insurance, we encourage you to read the Employer’s Guide to Unemployment Compensation or check out the CT Department of Labor’s Unemployment Insurance Tax Information Center.
File Your Taxes
Every year, employers must report the amount of wages paid and taxes withheld for each employee on a federal wage and tax statement. This report is filed using Form W-2, wage and tax statement which employers must complete for each employee.
By the end of February, employers are required to send Copy A of their employees’ W-2 forms to the Social Security Administration to report the wages and taxes of your employees for the previous calendar year. In addition, employers should send copies of W-2 forms to their employees by January 31 of the year following the reporting period. Visit ssa.gov/employer for more information.